Lionsgate slides on downgrade

Lionsgate slides as analyst cuts rating on competitive, cost concerns

Lionsgate falls on downgrade. Stockwinners.com
Lionsgate falls on downgrade.

Bernstein analyst Todd Juenger downgraded Lionsgate (LGF.B) to Market Perform this morning, putting some pressure on the shares.

The analyst argued that competitive investment from rival premium and Subscription Video On Demand, or SVOD, services has gotten much more intense, while also pointing to increased programming investment at Starz.

MOVING TO THE SIDELINES

In a research note this morning, Bernstein’s Juenger downgraded Lionsgate to Market Perform from Outperform and lowered his price target on Class B shares to $30 from $35.

The analyst told investors that he believes competitive investment from rival premium and SVOD services has gotten much more intense, and noted that increased programming investment at Starz is a necessary but recurring cost of doing business, which means the normalized growth rate for Starz has to be lower.

#Juenger added that while Lionsgate likes to tell investors they offer higher-than-average growth at lower-than-average risk, he sees, at best, average growth, with higher-than-average risk.

Further, M&A is always possible, but if discussions were on-going or imminent, the company would not choose to increase investment, lower guidance, and reinstate a dividend, the analyst contended.

NEAR-TERM UPSIDE MUTED

Last week, Barrington analyst James Goss lowered his price target for Lionsgate to $34 from $40, while reiterating an Outperform rating on the stock.

The analyst noted that with the company’s repositioning its film slate under new leadership, and increasing its investment in programming for Starz, Lionsgate sees more muted growth in 2019, with a significant ramp in 2020. While Goss expects near-term upside to be muted, he believes the Starz service will be a more attractive offering in the “shifting media landscape,” which should provide further opportunities for long-term growth.

INDUSTRY CONSOLIDATION

According to a report by CNBC earlier this month, Comcast (CMCSA) could consider topping Disney’s (DIS) bid for 21st Century Fox (FOXA) if regulators approve AT&T’s (T) acquisition of Time Warner (TWX).

While no decision has been made by Comcast, Disney is already considering responses in case Comcast makes a run at Fox, the report added.

On December 14, Disney and 21st Century Fox announced they had entered into a definitive pact under which Disney will acquire 21st Century Fox, including the company’s Film and Television studios, along with cable and international TV businesses, for approximately $52.4B in stock.

As part of the deal, Fox will spin off Fox Broadcasting network and stations, Fox News, Fox Business, FS1, FS2, and Big Ten Network to its shareholders.

PRICE ACTION

In Wednesday’s trading, Class B shares of Lionsgate had dropped over 1% to $26.90.


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Aegean Marine to acquire H.E.C. Europe for $367M

Aegean Marine to acquire H.E.C. Europe for approximately $367M

Aegean Marine to acquire H.E.C. Europe for $367M. Stockwinners.com
Aegean Marine to acquire H.E.C. Europe for $367M.

Aegean Marine (ANW) is pleased to announce that today it has entered into a definitive agreement to acquire all of the outstanding share capital of H.E.C. Europe Limited, the parent company of Hellenic Environmental Center S.A. and a group of companies that together provide global port reception facilities services, from the shareholders of H.E.C., for aggregate consideration of approximately $367M, including the assumption of certain indebtedness, which consideration is payable in the form of a combination of debt, the assignment of certain accounts receivables, cash and shares of Aegean common stock, which will represent approximately 33% of the issued and outstanding common stock of Aegean after giving effect to the issuance.

The Sellers are companies owned and controlled by Dimitris Melisanidis and certain members of his family, and members of the Agiostratitis family.

Aegean expects the acquisition, which results from several months of negotiations, to be immediately accretive to adjusted earnings per share in year one.

The acquisition was unanimously approved by the Aegean Board upon the recommendation of a special committee of independent directors. In making its recommendation, the Special Independent Committee consulted with its independent financial advisor, Clarksons Platou Securities and outside legal counsel.

The acquisition does not require the approval of Aegean’s shareholders. Aegean expects the acquisition to be immediately accretive to adjusted EPS in year one. Post-closing of the transaction, expected additional 2018E Revenues will amount to approximately $60M-$65M and 2018E EBITDA will amount to approximately $35M-$40M, which assumes timely closing of the transaction and completion of targeted acquisitions in 2018.

In addition, Aegean expects to appoint one additional independent director to the Aegean Board, effective as of the closing of the acquisition, creating an eight member Board of Directors.

ANW closed at $4.45.


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Broadcom lowers its offer for Qualcomm

Broadcom adjusts offer for Qualcomm to $79.00 per Qualcomm share 

Broadcom proposes to buy Qualcomm for $79 per share.  

Broadcom (AVGO) reaffirms its commitment to acquiring Qualcomm (QCOM), and is adjusting its offer following the Qualcomm board’s decision to transfer $4.10 per Qualcomm share (or $6.2B of value) from Qualcomm stockholders to NXP (NXPI) stockholders.

Broadcom is prepared to acquire Qualcomm for $79 per Qualcomm share, consisting of $57 in cash and $22 in Broadcom shares (premised on Qualcomm’s revised agreement to acquire NXP at $127.50 per NXP share).

In addition, Broadcom’s proposed merger agreement for Qualcomm would provide for an automatic increase of $3 in cash per Qualcomm share, or a total of $82 per Qualcomm share, consisting of $60 in cash and $22 in Broadcom shares, in the event that Qualcomm is unable to complete the NXP (NXPI) acquisition.

Broadcom’s proposed merger agreement otherwise remains unchanged, including the $8 billion regulatory reverse termination fee and 6% per annum (net of dividends) ticking fee accruing from and after the 12-month anniversary of the date of the merger agreement.

Broadcom believes that a responsible Qualcomm board could have preserved value by following ISS’s clear recommendation to work with Broadcom on the NXP transaction and negotiate the sale of Qualcomm to Broadcom.

Instead Qualcomm’s board acted against the best interests of its stockholders by unilaterally transferring excessive value to NXP’s activist stockholders.

Despite this direct value transfer, Broadcom remains committed to delivering a value-maximizing offer to Qualcomm stockholders.

Broadcom remains confident that Qualcomm’s stockholders will continue to support its proposal to acquire Qualcomm, and looks forward to concluding a transaction with this Qualcomm board of directors, or the newly elected Qualcomm board following its annual meeting on March 6, 2018.

Broadcom continues to urge Qualcomm stockholders to vote the entire BLUE proxy card “FOR” ALL SIX Broadcom nominees to show support for the Broadcom proposal.


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Positive data reported on uterine fibroids

Phase 3 ELARIS UF-I study of elagolix met primary endpoint

Phase 3 ELARIS UF-I study of elagolix met primary endpoint. Stockwinners.com
Phase 3 ELARIS UF-I study of elagolix met primary endpoint.

AbbVie (ABBV) in cooperation with Neurocrine Biosciences (NBIX), announced that the Phase 3 ELARIS UF-I study of elagolix met its primary endpoint.

Results from the first of two pivotal Phase 3 studies demonstrated at month six that elagolix, in combination with low-dose hormone (add-back) therapy, reduced heavy menstrual bleeding with 68.5 percent (pless than 0.001) of women with uterine fibroids achieving clinical response compared to placebo (8.7 percent), as measured by the alkaline hematin method.

Uterine fibroids are noncancerous growths of the uterus that often appear during childbearing years. Also called leiomyomas (lie-o-my-O-muhs) or myomas, uterine fibroids aren’t associated with an increased risk of uterine cancer and almost never develop into cancer.

Fibroids range in size from seedlings, undetectable by the human eye, to bulky masses that can distort and enlarge the uterus. You can have a single fibroid or multiple ones. In extreme cases, multiple fibroids can expand the uterus so much that it reaches the rib cage. Many women have uterine fibroids sometime during their lives. But most women don’t know they have uterine fibroids because they often cause no symptoms.

Clinical response was defined as menstrual blood loss volume of less than 80 mL during month six and a 50 percent or greater reduction in menstrual blood loss volume from baseline to month six.

The study also met all ranked secondary endpoints (pless than 0.001) at month six.

Both stocks are higher in pre-market trading.


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